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Cost Equation

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The short-run cost function of a company is given by the equation, TC=200+55q, where TC is the total cost and q is the total quantity of output, both measured in thousands.

Suppose the company borrows money and expands its factory. Its fixed cost rises by $50,000, but its variable cost falls $45,000 per 1,000 units. The cost of interest (i) also enters into the equation. Each 1-point increase in the interest rate raises costs by $3,000. Write the new cost equation.

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The short-run cost function of a company is given.

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The short-run cost function of a company is given by the equation, TC = 200+55q, where TC is the total cost and q is the total quantity of output, both measured in thousands.
Suppose the ...

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